UPDATE 1-AC Milan face UEFA sanctions after FFP referral

MILAN, May 22 (Reuters) - AC Milan are facing UEFA sanctions for breaching financial fair play rules after the club failed to reach a settlement agreement with European soccer’s governing body.

UEFA said in a statement on Tuesday that the Investigatory Chamber of the Club Financial Control Body had decided to refer AC Milan for breach of the fair play regulations, in particular the break-even requirement.

The statement added that UEFA had turned down a request by the Italian club for a settlement agreement.

Under UEFA regulations, any European soccer club spending more than its generated revenue faces possible sanctions, including, in certain circumstances, a ban from playing.

Milan have qualified for next season’s Europa League and could be excluded as part of any sanctions.

Milan had asked UEFA to exercise its right to waive the rules after Chinese entrepreneur Li Yonghong bought the club last year from Italian holding company Fininvest, which is owned by the family of former Prime Minister Silvio Berlusconi.

U.S. private equity fund Elliott last year gave Li a 180 million euro ($212 million) lifeline to complete the purchase of the Serie A club, which is trying to emerge from years of losses with a turnaround plan.

In its note, UEFA said the Investigatory Chamber believed there remained uncertainties regarding the refinancing of the loan and the notes to be paid back in October 2018.

It said the Adjudicatory Chamber would make a decision on the case in due course.

Seven times European champions AC Milan qualified for next season’s Europa League, the continent’s second tier club competition, after finishing sixth in Serie A. ($1 = 0.8491 euros) (Reporting by Elvira Pollina, writing by Stephen Jewkes Editing by Toby Davis)